Russian President Vladimir Putin has said Ukraine endured an unconstitutional coup after months of anti-government protests prompted leader Viktor Yanukovych to flee. While Mr Yanukovych had no chance of being re-elected, the Ukrainian opposition immediately violated a February 21 peace accord brokered by the European Union, Mr Putin told a news conference on Tuesday at his residence near Moscow.

In his first public remarks since Mr Yanukovych’s ouster last month, Mr Putin said he’d only send soldiers to the country in an extreme case. Mr Yanukovych had asked Russia to send troops to protect ethnic Russians in his country, Mr Putin told reporters. His comments signal that the crisis, the worst between Russia and the West since the Cold War ended, won’t immediately escalate.

Earlier, Russia's ambassador to the United Nations had brandished a photocopied letter he said had been written by Mr Yanukovych, telling reporters at the UN’s headquarters in New York it was justification for his nation’s occupation of the Crimean peninsula.

The defiant display came us the United States prepared to impose sanctions on high-level Russian military officials.

Speaking after a long and heated Security Council meeting, ambassador Vitaly Churkin displayed the document as evidence that Russia was in Crimea legally and is seeking only to protect ethnic Russians in Ukraine from what he earlier called "armed right-wing extremists" who had been encouraged by the West.

''The President of Russia has received the following from president Yanukovych and I quote: 'As a legitimately elected representative, I say the events in Kiev have resulted in the fact that Ukraine is on the brink of civil war. In the country there is chaos and anarchy ... the lives and security and the rights of people particularly in Crimea are being threatened'," Mr Churkin said.

He read on from the letter: ''Under the influence of Western countries there have been open acts of terror and violence. People have been persecuted for their language and political reasons. So in this regard I would call on the President of Russia, Mr Putin, asking him to use the armed forces of the Russian Federation to establish legitimacy, peace, law and order, and stability, and defend the people of Ukraine.''

''We still have not received any compelling answer to the simple question: why are Russian forces illegally occupying Crimea and brutally violating international law?'' Mr Sergeyev said.

He said 16,000 Russian troops were already in the Crimean peninsula and thousands more were massed on the nation’s eastern border, suggesting Russia was prepared for a further incursion into Ukraine.

Mr Sergeyev even accused Russia of preparing to commit attacks in the coming hours against its own troops in Crimea in order to justify further military intervention.

The US ambassador to the UN, Samantha Power, also dismissed the Russian position out of hand. ''Listening to the representative of Russia, one might think that Moscow had just become the rapid response arm of the Office of the High Commissioner for Human Rights,'' she said. ''So many of the assertions made this afternoon by the Russian Federation are without basis in reality.

''It is a fact that Russian military forces have taken over Ukrainian border posts. It is a fact that Russia has taken over the ferry terminal in [the Crimean port of] Kerch. It is a fact that Russian ships are moving in and around Sevastopol. It is a fact that Russian forces are blocking mobile telephone services in some areas. It is a fact that Russia has surrounded or taken over practically all Ukrainian military facilities in Crimea. It is a fact that today Russian jets entered Ukrainian airspace.''

She said there was no evidence of widespread violence against ethnic Russians in Ukraine, and called on Russia to allow international monitors into the region to ensure their safety and begin working on a political solution to the crisis.

The Obama administration suspended military ties to Russia, including exercises, port visits and planning meetings, just a day after calling off trade talks. If Moscow does not reverse course, officials said they will ban visas and freeze assets of select Russian officials in the chain of command as well as target state-run financial institutions.

Australia's UN ambassador, Gary Quinlan, told the Security Council that Australia supports plans to deploy international monitors to the region and called for an immediate de-escalation of the crisis.

China, which has in the past sided with Russia in the Security Council, made a brief statement emphasising the importance of Ukraine’s territorial integrity and sovereignty.

''China consistently stands for the principal of non-interference in the internal affairs of another country and of respect for Ukraine’s independence, sovereignty and territorial integrity,'' China’s UN ambassador, Liu Jieyi, said.

Earlier, Russia denied reports it had issued an ultimatum demanding Ukrainian forces surrender or face a ''storm'' of Russian force. A Russian Defence Ministry official said, "we are used to daily accusations about using force against our Ukrainian colleagues ... efforts to make us clash won't work", Voice of Russia radio reported.

As US Secretary of State John Kerry prepared for talks with Ukrainian leaders in Kiev on Tuesday, the State Department confirmed it was preparing sanctions to be employed should Russia not withdraw its troops.

''These reports today of threats of force against Ukrainian military installations would, if true, in our view constitute a dangerous escalation of the situation for which we would hold Russia directly responsible,'' a spokeswoman said.

Even without taking action, Western officials hoped the immediate and unscripted reaction of world markets would give Moscow pause. Russia's benchmark stock index dropped 9.4 per cent and the ruble fell to a record low against the US dollar. The Russian central bank took the extraordinary step of raising interest rates by 1.5 percentage points, spending an estimated $US20 billion to support the currency.

But the Europeans made clear they are not yet willing to go as far as the United States in terms of economic strictures at this point.

A British government document carried by an official near 10 Downing Street in London and photographed by a journalist indicated a resistance to tougher measures. The document, shown on BBC, said Britain should support ways of providing energy to Ukraine "if Russia cuts them off" but that European ministers should "discourage any discussion" of military preparations. "The UK should not support for now trade sanctions or close London's financial centre to Russians," the document said.

Russia is effectively the world's biggest energy exporter, shipping 7.5 million barrels of oil a day compared to about one million for Iran, which has been subject to Western sanctions.

"The biggest argument for severe economic sanctions not being imposed is that the European countries don't have much of an alternative to Russian energy supplies," said Jens Nordvig, the New York-based managing director of currency research at Nomura Holdings Inc.